One of the most troubled privately-run jails in Britain urgently needs a team of public sector managers to come in and bail it out, according to a report by the chief inspector of prisons published today. Prisoners, rather than the often young and inexperienced staff, are in control in parts of Rye Hill prison near Rugby, Warwickshire, which is run by the private security firm GSL, Anne Owers warns. At least 100 inmates should be moved out to other jails, she says.

In her third inspection since the prison opened in 2001, the chief inspector says that safety remains "fundamentally fragile" with 52% of the 660 inmates, including 150 lifers, saying they felt unsafe.

When prison inspectors visited Rye Hill in June they were told of 617 reportable incidents so far this year, including two rooftop protests, drug finds and assaults. Ten weapons had been found in the previous four weeks and glass bottles available from the canteen had been used as weapons in violent assaults.

The inspectors say prisoners were not only verbally aggressive towards staff but had also managed to subvert the incentives scheme to such a point that many of the most badly behaved were actually on the "enhanced" or "super-enhanced" levels of the scheme, which include extra visits and even meals with families.

The Prison Service said last night that a decision had been taken in August to reduce Rye Hill's population from 664 to 600. But it rejected the chief inspector's demand for a team of experienced public sector managers to be sent in to stabilise the prison. Instead a "rectification notice" has been issued against GSL, which has appointed a new director.

The chief inspector's report follows disclosures by an undercover reporter working for Guardian Films who earlier this year uncovered routine bullying of staff by prisoners who had easy access to drugs and mobile phones.

Ms Owers says many prisoners and staff told inspectors that prisoners were inadequately supervised on the wings, often by only one member of staff: "There was some evidence that violent incidents were not consistently followed up or investigated, which led to prisoners stating that they, rather than the staff, were in control of the units."